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Trump Administration: Impact on Healthcare Policy

Republicans’ biggest issue will be what to do with the 20 million Americans who have gained coverage under the ACA.

Congress reconvened this week for the first time since Donald Trump’s stunning victory, and just as his election was a political earthquake, the impact of the Trump administration and the Republican Congress on healthcare policy promises to be just as sweeping.

President-elect Trump made repealing the Affordable Care Act (ACA) a centerpiece of his campaign, and with a Republican-controlled Congress, the multiple prior attempts could pave the path for dismantling the ACA in short order. GOP policymakers are plotting how best to move forward, what portions of the ACA to leave intact and what replacement language they can agree to. Stakeholders, like insurers and hospitals, have thrown out their pre-election strategies and are scrambling to understand and shape potential ACA policy decisions in this unexpected and unpredictable policy environment.

While the future of the ACA will consume lawmakers in the coming months, the election’s outcomes promise to impact a range of additional healthcare issues, including Medicare and Medicaid payment and delivery system reforms; drug prices; the future of the Center for Medicare & Medicaid Innovation (CMMI); and the Independent Payment Advisory Board (IPAB), a key provision of the ACA that many lawmakers have sought to eliminate.

It’s a new political world in Washington, and public policy that has historically been marked by partisan-fueled gridlock suddenly seems possible, creating new risks and new opportunities for healthcare stakeholders.

Lame-Duck Session

The one thing that members of Congress must do in the lame-duck session before they adjourn is pass a spending bill to keep the government operating before the continuing resolution expires on December 9, 2016. Many are arguing over how long the next spending measure will extend, given several impending spending issues (including a vote to raise the debt ceiling) that will ripen in March. In any event, there appears to be little appetite to do much until the new Congress is sworn in with a Republican majority in both houses and a Trump administration fully in place.

Before year’s end, Congress will likely consider a version of the medical innovation legislation “21st Century Cures” (HR 6) prior to the end of Rep. Fred Upton’s (R-MI) term as chair of the House Energy and Commerce Committee. Rep. Upton has made the Cures legislation a key priority in 2016 and feels strongly about the provisions in the House bill, which now resides in the Senate. But the effort remains blocked by disagreements over how to pay for the bill’s increased funding for NIH and FDA, as well as new funding for Vice President Biden’s Cancer Moonshot initiative. Congressional staff last week said the legislation likely wouldn’t be considered until December at the earliest. Although Senate Majority Leader Mitch McConnell (R-KY) and other GOP leaders have indicated that HR 6 should be a priority in the lame-duck session, other legislators believe the Cures legislation will be delayed until 2017, when it could be folded into other industry user fee reauthorization.

The focus on opioid abuse and legislation drafted to help address this issue could also die in the lame-duck session.

Prior to the election, pharmaceutical manufacturers called on Congress to stall the proposed Medicare demonstration program, funded by CMMI to provide reimbursement for physician-administered drugs. Industry lobbyists wanted to attach language blocking the CMMI demonstration to a separate “must-pass” funding bill to keep the government open after the current stopgap budget expires on December 9.

Theoretically, the Trump administration could claw back the demonstration program after a new CMS administrator is sworn in next year. But the president-elect became a wild card on drug issues after he advocated for several adverse policies during the campaign, including drug importation and allowing the federal government to negotiate directly with manufacturers on pricing. (Neither importation nor overturning the so-called non-interference policy on prices is currently featured on the president-elect’s transition website.)

Housekeeping

Congress reconvened this week for mostly internal housekeeping, including electing new leaders and issuing committee assignments to newly elected lawmakers. No changes are expected to the House GOP leadership, though Speaker Paul Ryan (R-WI) could face a challenge in January when the entire House votes on his re-election.

Some House Democrats, led by younger members, are pushing to delay their party’s elections (three of the Democrats’ top four House leaders are at least 75 years old).

Sen. Chuck Schumer (D-NY) will replace retiring Minority Leader Harry Reid (D-NV). Schumer will have to balance a newly ascendant liberal wing led by Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) with the political reality that 25 Democratic senators face re-election in 2018, including many in states Trump won.

House Republicans also will decide who will replace term-limited Energy and Commerce Committee chair Fred Upton (R-MI). The committee has principal jurisdiction over healthcare regulatory policy, the FDA, and Medicaid and Medicare. GOP leaders will choose between Reps. Greg Walden (R-OR), and John Shimkus (R-IL).

The House is scheduled to vote this week on a series of healthcare bills, including establishing an HHS panel to recommend how to implement preventive health strategies for people with diabetes and metabolic and autoimmune diseases; authorizing emergency medical services personnel to administer anti-seizure medications, narcotic painkillers and other controlled substances; and reauthorizing tens of millions of dollars in grants and scholarships for nursing education programs.

Affordable Care Act

After railing against the ACA for months, Trump has recently softened his stance, saying he would be open to amending the law rather than repealing it. That’s less a policy retreat and more an acknowledgment that Republicans had wanted to keep some provisions they have long championed, such as coverage for pre-existing conditions.

But make no mistake, Trump and Congress will try to largely dismantle the ACA, and the efforts are already underway. They are likely to use a procedural technique called “reconciliation” that allows the GOP to bypass an expected Democratic-led filibuster in the Senate and approve legislation with only Republican votes.

Congress can’t repeal all of the ACA with reconciliation, only those sections that relate to taxes and spending, including new taxes created to fund the program, such as those on medical devices, subsidies to buy health insurance, penalties for not having insurance and Medicaid expansion. Important and controversial provisions, such as the individual mandate, cannot be repealed through reconciliation. However, much can be done by executive order and by failing to enforce, fund and vigorously defend the ongoing lawsuits challenging the ACA. Moreover, since the ACA’s success was largely tied to provisions and elements working in concert, dismantling the financial underpinnings of the ACA through reconciliation could cause serious distortions in the insurance markets and the exchanges, which are already in a state of disarray.

It is highly unlikely that the many fraud enforcement or consumer provisions will be subject to immediate repeal and very likely that we will find these important provisions (some of which are CBO money savers) in a replace legislative package.

Republicans’ biggest issue will be what to do with the 20 million Americans who have gained coverage under the ACA. Some lawmakers want a repeal bill ready for Trump’s signature in January along with companion legislation to replace the ACA. It is likely that a concept for replacement will be unveiled at the same time as a repeal package, but the repeal package would include a transition period to allow for the introduction and passage of a replace package.

Insurers are already selling 2017 policies, and Republicans have been unable to coalesce around what would take the ACA’s place. Now that replacing the law is no longer theoretical, the process of agreeing on new coverage will likely play out over a period of months. A potential template could be House Speaker Paul Ryan’s “A Better Way.” Recently, the Heritage Foundation sent a white paper to the Trump campaign that contained several provisions for healthcare reform, that could also form a foundation for changes.

Drug Prices

Pharma companies dodged a bullet last week.

The drug industry was preparing for legislative and regulatory assaults from an expected Clinton administration and a Democratic-controlled Senate. Democrats would have grilled the industry over drug prices, including subpoenaing internal information on pricing decisions as well as marketing and research spending.

But not all is rosy for pharma. The president-elect is a wild card whose campaign comments on the industry could have come from Sanders’ talking points.

Rising drug prices and the lack of industry transparency that goes into pricing play to the populist anger Trump tapped into during the campaign. Even congressional Republicans are not immune to that sentiment and are expected to press FDA to speed generic applications to ensure competition for non-branded drugs.

Still, considering the downside risk pharmaceutical manufacturers faced with the likes of Sen. Bernie Sanders, among others, firing off subpoenas and holding hearings, drug companies will be playing less defense than they had feared.

Medicare and Payment Reform

Congressional Republicans earlier this year proposed combining Parts A and B of the Medicare program to promote care coordination and discourage overutilization, a major change in billing and operations that would need to occur nationally; strengthening Medicare Advantage; repealing the IPAB (which would authorize Medicare cost reductions outside the political process) and CMMI; repealing the ban on physician-owned hospitals; and reforming Medigap insurance.

Outside the ACA, the implementation of major changes to physician payment under MACRA may be reviewed and other controversial regulatory changes to the Medicare program could be pulled back or slowed significantly under new leadership in HHS.

Within the ACA, a change of funding for or repeal of the CMMI and a scaling back of the agency’s numerous alternative payment and delivery demonstration projects (including accountable care organizations) that are currently under way could disadvantage private payers.

Pharmaceutical manufacturers and physician groups working to derail and possibly kill the CMMI pilot program for Medicare Part B reimbursements (and the likely forthcoming demonstration for Part D) could benefit from a policy shift in CMMI funding. Congress may attempt to stop or roll back the Part B demonstration in December, or lawmakers could wait until early next year to work with the new CMS administrator to scale back the program.

Trump could clash with Republicans on Medicare. He was clear during the campaign that he didn’t want to change Medicare. But his transition team says the incoming president favors “modernizing” the Medicare program. Lawmakers would like to model changes on what they see as the market-based success of Part D, with plans openly vying for seniors’ business.

Medicaid and CHIP

House Speaker Ryan, a key policymaker in the healthcare space, said last week that he wants to push for a large-scale Medicare and Medicaid overhaul next year, which may include the concept of block-grants for state Medicaid programs.

Thirty-one states leveraged federal money to expand their Medicaid programs under the ACA. The likelihood of continued Medicaid expansion is low, given the talk of repeal. So how will Congress and the Trump administration pursue the call for enhanced state flexibility? By continuing to approve and review the 1115 waivers that enable states to test and evaluate policy approaches that do not meet current Medicaid program rules. Nearly two-thirds of the states are currently operating under one or more 1115 waivers. However, the 1115 waivers are not well-liked by current CMS leadership.

Another option created by the ACA is the Section 1332 state innovation waiver, which would allow states to refashion insurance coverage by waiving specific parts of the ACA. Available January 2017, the 1332 waivers have been widely discussed as a preferred vehicle for pursuing certain innovative reforms.

Important changes to the disproportionate share hospital (DSH) supplemental payment program required by the ACA could also occur, but this could cause confusion in the hospital accounting world and among Medicaid programs, as regulations are in the process of being finalized and proposals for reductions are being considered.

Finally, the Children’s Health Insurance Program (CHIP) comes up for reauthorization in 2017. Opposition by Congress and the Trump administration could end CHIP, leaving millions of children without coverage, unless the issue is addressed in early 2017.

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